Testimony of Scott Snider, President, Exit Planning Institute — Succession Planning: Opportunities to Build Wealth and Keep Jobs

Summary

Written testimony of Scott Snider, President of the Exit Planning Institute, titled Succession Planning: Opportunities to Build Wealth and Keep Jobs in Local Communities and dated January 24, 2024, addressed to Chairwoman Shaheen, Ranking Member Ernst and committee members. Snider describes the institute as an Ohio-based family business serving over 5,000 Certified Exit Planning Advisors. Citing the National State of Owner Readiness Survey, the testimony states that owner wealth is projected at nearly $18 trillion, with $14 trillion coming to market in the next 10 years, and that 80% of owners lack a formal exit strategy. It proposes three opportunities: educational programming on exit strategy, greater access to coaching and services, and data and research on succession planning gaps. The testimony is two pages.

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Testimony of Scott Snider
President, Exit Planning Institute



         Succession Planning: Opportunities to Build Wealth and Keep Jobs in Local Communities
                                             January 24, 2024


Thank you, Chairwoman Shaheen, Ranking Member Ernst, and all members of this committee. It is an
incredible honor to be here with you today.
My name is Scott Snider, and I am the President and co-owner of the Exit Planning Institute—an Ohio-
based, privately-held family business that supports professional advisors who help business owners
successfully transition their companies. We provide advisors with a professional network, regional and
national conferences, continued education courses, and—most notably—a credential. We began in 2005
and today serve over 5,000 Certified Exit Planning Advisors and another 10,000 professionals throughout
the world.
As this committee well knows, there are over 30 million small businesses in the U.S. that employ nearly
62% of Americans. For these business owners, nearly 90% of their wealth is trapped inside of their largest
asset: their company. Wealth that will be critical for them to move into the next phase of their lives. Even
more, wealth that has a deep impact on social and economic elements that make up our country today.
According to the most recent National State of Owner Readiness Survey, this wealth is projected to total
nearly $18 trillion—with $14 trillion alone coming to market in the next 10 years as 73% of owners
report they want to exit from their companies within that timeframe.
Historically, there’s been a low success rate of privately-held company transitions—an indication that
business owners are ill-prepared for their eventual exit. According to the same research, 60% of owners
do not understand their exit options… 80% do not have a formal exit strategy… and 50% of owners have
no plan at all.
Worse yet—70% of the companies put on the market do not sell… and 50% of the exits will be
involuntary due to external elements that force a business owner to sell or close.
These statistics remind me of a story from a fellow owner. A business owned by three sisters in
Pennsylvania. One of them—in tears—came up to me after an exit planning event and shared she was
trying to figure out what to do next in her life. One of her sisters had passed quickly after a cancer
diagnosis. She’d been the visionary and heartbeat of the company. And without her, the remaining two
could not operate the business and closed their doors only two months after their sister’s passing. Sadly,
they became owners who fell to the involuntary exit. Preventable by appropriate planning.
To understand the problem, we must understand the mindset of the business owner. As owners, we are
trained to grow a successful company—one with great employees and customers… meaningful products
and services.... and a strong balance sheet and profit. But when we go to transition our companies, we are
slapped in the face with a harsh and unexpected reality.
Though we may be successful, we did not build anything of significance. All our intellectual capital is
locked within us. Never transferred to anyone else or any one thing.


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© EXIT PLANNING INSTITUTE                                                        CREATED: MONDAY, JANUARY 22, 2024
Testimony of Scott Snider
President, Exit Planning Institute



What is a significant company? It’s one aligned to the owner’s business, personal, and financial goals. It’s
ready and attractive with an owner who is well prepared. Most importantly, a significant company is
highly valuable and transferrable at any time.
Being in the unique position of both teaching the path to significant companies but also living it daily as a
business owner myself, I see three key opportunities for us to better support those who will transition
their companies:
     1) First, educational programming that brings exit strategy into the present. Incorporating it early
        and often makes a company stronger at point of transition. And makes a better company today.
        This is something we have done with SCORE and the Small Business Development Centers of
        America.

     2) Secondly, we need greater access to coaching and services. 78% of owners have not formed a
        transition advisory team that embraces the three elements for significance: business, personal, and
        financial.

     3) Lastly, data and research. Policymakers need to better understand succession planning gaps that
        impact small businesses sales, transitions, and closures.



These simple actions, I believe, help to change the owner’s mindset, keep small businesses active in our
local communities, and put us on a pathway that positively impacts our economy.
An important conversation given the number owners indicating they want to exit within the next five to
ten years.
Thank you for the privilege and honor of sharing my testimony with you today. I am happy to answer
questions as I can.




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© EXIT PLANNING INSTITUTE                                                         CREATED: MONDAY, JANUARY 22, 2024


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